HETEROGENEOUS EFFECT OF SECTORAL COMPOSITION ON THE GREEN TECHNOLOGY INNOVATIONS IN ASIA’S MIDDLE-INCOME COUNTRIES

Abstract

This study examines the extent to which sectoral composition can affect green technology innovations in 20 selected Asia’s Middle-Income countries from 1995 until 2016. To measure the cross-sectional dependence among cross-sectional units and allows heterogeneous coefficients in a panel, this study will adopt the Dynamic Common Correlated Effect (DCCE). The results show that an increase in the proportion of industry and services sectors plays an important role in innovations of environmentally friendly technology. It is also knowing that the tourism sector and pollution level would be a prospect for green technology innovations. On the contrary, the increasing proportion of the agriculture sector may hinder green innovations. The finding of this study can be helpful for policymakers in middle-Income countries to promote a balance of green technology development in each sector for the sake of comprehensive sustainable development.